The catch with insurance is it’s almost always sold by agents who work on commission. This makes it difficult for them to do what’s truly in your best interest. Here are three things you really need to know, but that your insurance agent probably won’t tell you:

“You should buy less insurance”

Certain life events call for buying more insurance. A prime example is having a baby. With another mouth to feed, there’s even more at stake if you were unable to work and provide income. Insurance can step in when you need it most.

But there are also situations where you need less insurance. For example, as your kids grow up and become financially independent, and as you build up your savings and pay down your debts, you can often start to reduce your coverage and premiums.

“I was lazy and rounded up”

Life insurance is often sold in big, round numbers, like $500,000 or $1,000,000. This is for two main reasons. First, calculating a more precise amount requires some pretty complex math. Second, rounding up to a big number is an easy way to make just a little more commission.

Your protection amount must be based on a deep understanding of your financial life today and in the future. Anything less is lazy – and wrong.

“Insurance usually isn’t a good investment”

A number of insurance products are sold as investments. They go by names like whole life insurance, universal life insurance, and segregated funds, which look a lot like mutual funds, but with an added insurance component.

The problem with these products is the investment returns are often lacklustre due to massive (but poorly explained) fees and commissions. It’s almost always better to buy low-cost insurance and low-cost investments, and keep them as two separate parts of your financial plan.

At Planswell, you’ll never have to worry about us selling you more than you need, taking shortcuts, or glossing over fees. We’re here to make honest advice fast and friendly for you!

If you depend on your paycheque to pay the bills, you need something to fall back on if something unexpected happens. That’s why disability insurance is a basic building block of a good financial plan.